Forty years ago, a concerted effort by new technology groups, consumer advocates, and a few leaders in all three branches of the federal government came together to push for greater openness, competition, and modernization in the heretofore monopolized U.S. telecommunications industry.
AT&T pushed back hard. At one point in 1976, AT&T had recruited a majority of the House of Representatives as co-sponsors of the “Bell Bill,” which provided that only AT&T could offer long distance service and only telephones provided by local telephone companies (mostly AT&T’s) could be used by consumers — and they could only be leased, not bought. Consumers had a single, expensive choice for renting an answering machine.
AT&T argued that the private ownership of telephones, and the manufacture and sale of competing (and newly digital) devices, would render significant damage to the telephone system both technically and economically. (Remember AT&T’s national advertising campaign, “The System is the Solution“?)
Leaders at the Federal Communications Commission, the Justice Department, and Congress independently began to press in the opposite direction. The Justice Department sued AT&T under antitrust laws. My predecessor as chairman of the House Communications Subcommittee, Rep. Lionel Van Deerlin (D-Calif.), blocked action on the Bell Bill, and finally the FCC capped a series of prior court decisions by ruling in 1979 that any company could sell telephones to the public if the telephones met a set of engineering specifications.
The next few years saw an explosion of innovation and technology (and lower prices) in telephone devices, which has not ceased. A set of further decisions and then the AT&T divestiture further opened telephony to competition.
Monopoly had ruled the industry for decades, but it lost out to modernization and competition.
Sound familiar? The strains of the monopolist’s dire warnings can be heard today in the battle over cable set-top boxes for homeowner television sets. Most cable subscribers today pay a monthly fee for the set-top box available only from their cable provider; the rental fee for each box often adds up to well over a hundred dollars per year; other sets in the home cost an additional amount. These fees are paid year after year by each cable customer. It has been estimated that American consumers spend about $19.5 billion a year on new television sets, and $20 billion per year renting set-top boxes. Lack of competition means that cable boxes that were installed years ago are still kicking off this annual fee, whereas very few of us are using the same cell phone or laptop we had five years ago.
The FCC has once again stepped forward. Led by former top cable TV lobbyist Tom Wheeler, the FCC has proposed a new version of its 1979 rule: Consumers should be able to buy any set-top box that meets an established engineering specification.
No surprise, then, that the cable industry has mounted an expensive, vigorous campaign against allowing consumers to buy their own cable box. Just like AT&T years ago, cable, the dominant video provider in most local markets today, is claiming that competition in, and ownership of, these consumer devices would threaten the integrity of the cable system and introduce unknown technology risks. In the most recent flurry of efforts to protect their market, my cable friends are even arguing that competition would be less energy efficient, would accelerate climate change, and would place an unfair burden on unwitting consumers.
We should learn from our own history. Following the AT&T battles, the entry of competition and new technology was greatly beneficial to consumers and businesses at every level of our economy. Can you imagine having to rent a laptop from the telephone company to access the internet? Despite the echoes of the monopolists of the past, competition in cable boxes will be sound policy as well. New technology will follow, and consumers will see the benefits in their pocketbooks. Set-top boxes are a good place to continue our positive tradition of innovation and competition in telecommunications.
Timothy E. Wirth (D-Colo.) represented Colorado in the U.S. Senate from 1987 to 1993 and in the House of Representatives from 1975 to 1987. He was the author of the Pro-Competition Resolution introduced in the House in 1975-76 as the alternative to the Bell Bill, and he chaired the House Telecommunications, Consumer Protection, and Finance Subcommittee from 1981-1987. He later served as Undersecretary of State, and was the founding President of the United Nations Foundation.
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